Intro

Key Takeaway: Money is a tool, not the goal. Used well, it can turn even a modest income into long-term freedom. Focus less on accumulating stuff and more on building financial independence, because control over your time and choices is the real reward.

Money management is one of the most important life skills to master. Proper money management can allow someone with a modest income to build real wealth; poor money management can leave even high earners financially trapped. Money is a tool—use it to buy your independence. Financial independence gives you control over your time and choices. If you are not financially independent, you are a slave.

Material things are largely a waste. They provide short-term satisfaction, can disappear quickly, and require your time to maintain them and resources to store them. Lasting satisfaction comes from using your money intentionally to buy freedom, not from accumulating stuff.

There are many great personal finance books, but a few I especially recommend are The Richest Man in Babylon, The Simple Path to Wealth, and The Psychology of Money. If you develop a deeper interest in how markets work, A Random Walk Down Wall Street is also a great read.

Basic Money Principles

Key Takeaway: Spend less than you earn, avoid unnecessary debt, and consistently invest the difference. Prioritize building real wealth over appearances by paying yourself first and letting your money work for you over time.

Stay out of debt, spend less money than you earn, and invest the difference between what you earn and what you spend. In general, the only kind of debt that is acceptable is a mortgage. Do your best to avoid all other debt.

“The rich rule over the poor, and the borrower is slave to the lender.”

Proverbs 22:7

Aim to invest a large portion of your income—50% if you can, and 15% at a minimum. Pay yourself first. Every dollar you spend is a dollar you will never get back, and you only earn a finite number of dollars over your lifetime. What you do with each dollar is very important. Make money work for you so you don’t have to spend your whole life working for money.

“If you don’t find a way to make money while you sleep, you will work until you die.”

“Do not save what is left after spending, but spend what is left after saving.”

Warren Buffett

Don’t fall into the trap of trying to keep up with or impress others. Many people who appear wealthy are burdened with debt and have little true financial security. Focus on building real wealth. There’s nothing wrong with enjoying nice things if you can afford them, but make sure you are wealthy before you try to look wealthy. Buy assets that produce cash flow and appreciate in value because that will free up your time, and being able to use your limited time on earth for whatever you want is the ultimate luxury.

“Wealth is what you don’t see—money invested, not spent.”

Morgan Housel

“One person pretends to be rich, yet has nothing; another pretends to be poor, yet has great wealth.”

Proverbs 13:7

Budgeting and Credit Cards

Key Takeaway: Use a budget to intentionally direct your money toward what matters most, and treat credit cards as a tool—not free money. When used responsibly, they can provide protection and rewards, but they must be paid off in full every month to avoid costly debt.

Use a budget. Many people think budgets exist to restrict spending, but their real purpose is to help you direct your money towards what actually matters. I use a simple spreadsheet along with YNAB, which I’ve found to be one of the best budgeting tools available and well worth the cost.

Before each new month begins, plan where every dollar you expect to earn will go. Remember that some of one month’s income often needs to cover bills due at the beginning of the next month. For example, you might not receive your first paycheck until the 10th, but still have bills due between the 1st and the 9th. In that case, you’ll need to carry some money forward from the previous month to bridge the gap. As income comes in, use YNAB to allocate it to categories and track your spending in real time throughout the month. Don’t get discouraged if your budget doesn’t work perfectly at first—adjusting it is part of the learning process, and mistakes are normal early on.

Credit cards are like guns. They are a tool that are neither good nor bad in and of themselves. Used responsibly, they are beneficial. Used irresponsibly, they are dangerous. They can be used to your advantage because they offer stronger fraud protection than debit cards, help you build credit, and provide rewards. But they can be financially destructive if used carelessly. Always pay the balance in full each month. Carrying a balance at credit card interest rates is extremely costly. Treat your credit card like a debit card—don’t buy anything unless you already have the cash to pay it off immediately. Choose cards with strong rewards and be mindful of fees.

For many years, I used the Fidelity Visa Signature Rewards card, which provided 2% cash back deposited directly into my investment accounts. Today, I use the Robinhood Gold card, which offers 3% cash back on purchases and 5% back on travel, with rewards credited immediately rather than monthly. It requires a Robinhood Gold membership (currently $50 per year), but the rewards I earn more than offset the cost for me.

Cash

Key Takeaway: Keep enough cash for emergencies (typically 3–6 months of expenses) but avoid holding excess cash long term because inflation erodes its value.

Holding too much cash in a bank account over the long term isn’t good, because inflation destroys its purchasing power. Inflation is the increase in prices—and corresponding decrease in the value of money—over time. What costs $100 today would cost roughly $145 in 10 years at a 3.8% average annual inflation rate (based on historical averages from 1960–2024). In other words, money that sits in cash and isn’t invested slowly loses real value.

That being said, you need some cash reserves as a safety net. A common guideline is to keep three to six months’ worth of living expenses in readily accessible cash. This is a good starting point, but you can adjust it based on your personal situation, job stability, and comfort level. Tracking your monthly expenses will help you estimate how much you need to cover one month of basic living costs, and you can build your emergency fund from there.

Keep this emergency cash in a high-yield savings account or a cash management account so it earns some interest while remaining available at any time. These accounts won’t generate high returns, but that’s not their purpose—this money is insurance, not an investment. I currently use a money market fund (SPAXX) within a Fidelity Cash Management Account. In the past, I’ve also used Marcus by Goldman Sachs. Online banks often offer higher interest rates due to lower overhead. Unexpected expenses will happen—cars break down, people get laid off, appliances fail, pets get sick—and having cash reserves allows you to handle these events without going into debt.

Investing

Key Takeaway: Investing is about patiently putting your money to work in productive assets and letting compounding do the heavy lifting over time; ignore get-rich-quick schemes, start early, invest in sound assets, and stay disciplined for the long run.

Investing is the act of putting your money into assets that can grow and produce more money over time. When you invest, you’re making your money work for you instead of having to work for money forever. This is the opposite of consumption. Consumption uses money to buy things; investing uses money to create more money.

Throughout your life, you’ll hear plenty of promises about getting rich quickly. Ignore that noise, no matter how tempting it sounds. Shortcuts and schemes rarely build lasting wealth and often end badly.

“Wealth from get-rich-quick schemes quickly disappears; wealth from hard work grows over time.”

Proverbs 13:11

Building wealth through investing takes time, patience, and discipline. The power of compounding over long periods is remarkable. Time in the market matters more than the amount you invest, which is why starting early is so important. Buy sound investments, hold them for the long term, and let compounding do the heavy lifting.

“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

“Our favorite holding period is forever.”

Warren Buffett

“Compound interest is the eighth wonder of the world.”

Albert Einstein

“The big money is not in the buying and the selling but in the waiting.”

Charlie Munger

The Stock Market

Key Takeaway: Treat stocks as ownership in real businesses, invest for the long term, ignore short-term noise, and keep buying through market ups and downs. Wealth is built by staying invested, not by reacting to fear or hype.

The stock market is one of the most powerful wealth-building tools available. Compared to real estate, it requires little time, capital, and effort to get started. While the details and theory can get complex, the basic idea is simple: publicly traded companies exist, and stocks represent ownership in those companies. When you buy a share of stock, you become a partial owner of a real business. Seeing yourself as a business owner—not a trader—helps you stay grounded when markets become volatile or emotional.

“American business — and consequently a basket of stocks — is virtually certain to be worth far more in the years ahead.”

Warren Buffett

Businesses earn profits and use those profits to pay down debt, reinvest in growth, or return money to shareholders through dividends and share buybacks. All of these things will profit you as an owner. Companies that pay a dividend are typically mature and well-established, while companies that don’t pay a dividend typically reinvest profits to fuel growth. Many individual businesses will fail over time, but that’s not a problem if you are properly diversified. The winners tend to outweigh the losers. The stock market is tilted in the investor’s favor because the most any single stock can lose is 100%, while the upside is unlimited.

Most stock market news is designed for short-term traders and daily headlines, not long-term investors. Different stock market participants have different goals, strategies, and time horizons—focus on yours. In the short run, prices move unpredictably based on sentiment, news, forecasts, and human behavior. But over the long run, markets rise because businesses generate profits. You don’t need to worry about daily, monthly, or even annual fluctuations. Long-term investors think in decades.

Market declines are a normal part of investing. Corrections (10% drops), bear markets (20% drops), and occasional crashes will happen. When they do, many people will claim that “this time is different.” But it probably isn’t—and if it truly were, investment performance would be the least of our concerns. Historically, after downturns, markets recover and go on to reach new highs. The key is to stay calm, keep investing through diversified, low-cost funds, and hold for the long term. Market downturns are actually opportunities to buy more shares at lower prices. Strong businesses will continue to earn profits; weaker ones will fade away and be replaced.

On the flip side, when markets are doing really well, you’ll hear predictions of imminent crashes and calls to sit on the sidelines. Ignore the noise. No one knows when the next downturn will occur, and waiting for it often means missing years of gains. Fear and pessimism sell headlines, but disciplined, long-term investing is what builds wealth.

“Be greedy when others are fearful.”

“The greatest enemies of the equity investor are expenses and emotions.”

Warren Buffett

Stock Selection

Key Takeaway: Instead of trying to pick individual winning stocks, invest in low-cost total market index funds to own thousands of companies at once. This diversification reduces risk and gives you a better chance of long-term success.

There are thousands of publicly traded companies around the world—over 3,000 in the United States and thousands more in other countries. Rather than trying to guess which individual companies will succeed, a smarter approach is to invest in a large group of them. This is called diversification: spreading your money across many different companies instead of concentrating it in just one. No single company is guaranteed to succeed forever. By owning small pieces of many companies, you protect yourself from any one failure and give your money more opportunities to grow over time.

You can do this very simply by investing in two funds: a total U.S. stock market index fund and a total international stock index fund. Index funds are large baskets of stocks managed at very low cost. A total U.S. stock market index fund holds shares of nearly every publicly traded company in America, while a total international stock market index fund holds shares of companies based outside the United States.

You don’t have to invest in international stocks—a total U.S. stock market index fund alone can serve as your entire stock portfolio. International investing does introduce additional risks, but concentrating all of your investments in a single country carries its own risks as well. Most professional and academic guidance recommends including some international exposure, and I think that’s a reasonable approach.

Most stock market gains in any given year come from a relatively small number of companies, and it’s impossible to reliably predict which ones will lead. Even professional investors struggle to pick winners consistently over long periods (with rare exceptions such as Warren Buffett, Charlie Munger, and Peter Lynch). Owning total market index funds means you are investing in the success of businesses as a whole rather than betting on individual companies, and you get the benefit of broad diversification at a very low cost.

“Don’t look for the needle in the haystack. Just buy the haystack!”

John Bogle

“The weeds wither away in significance as the flowers bloom. Over time, it takes just a few winners to work wonders.”

Warren Buffett

Bonds

Key Takeaway: Bonds provide stability but lower long-term returns than stocks, so they are most useful as you approach or enter retirement to reduce volatility; while you are still earning income, prioritizing a stock-heavy portfolio generally makes sense for long-term growth.

Bonds are another major type of investment. A bond is simply debt issued by a corporation or government to raise money—in other words, a loan. When you buy a bond, you are lending money to the issuer, and they agree to pay you back with interest. Some bonds pay regular interest payments (called coupons) throughout the life of the loan, while others pay all the interest and principal in a single payment at maturity. As with everything else here, you can dive into the details later if you want—this is just the practical overview of how bonds fit into your investing plan.

Bonds are generally considered less risky than stocks, assuming you hold them to maturity rather than trade them. First, the interest rate is set when you buy the bond, so you know in advance what return to expect. Second, if a company runs into financial trouble or goes bankrupt, bondholders are legally paid before shareholders. U.S. Treasuries (bonds issued by the U.S. government) are often considered “risk-free” because the U.S. has never defaulted on its debt and is highly unlikely to do so.

Lower risk, however, comes with lower expected returns. Over long periods, bonds historically underperform stocks. In my view, most people don’t need bonds in their portfolio until they are approaching retirement or already retired. While you are still working and earning income, you can afford to embrace the higher volatility of stocks by maintaining a 100% stock portfolio. The primary role of bonds is to reduce volatility and provide stability when you are living off your investments.

In addition to their lower risk, bonds are often (though not always) weakly or negatively correlated with stocks. This means that when stocks fall, bonds may hold steady or rise, helping cushion portfolio declines. That diversification effect is another reason bonds can stabilize a portfolio in retirement. If and when you add bonds, a Total U.S. Bond Market index fund is a simple, diversified option that gives you broad exposure to the bond market.

Brokerage Firms

Key Takeaway: Choose a reputable, low-cost brokerage that fits your preferences, then focus on long-term investing rather than frequent trading. My top picks are Robinhood, Fidelity, or Vanguard.

To invest, you’ll need to open an account with a brokerage firm.

Fidelity is an excellent all-around option. They offer strong customer service, robust research and portfolio tools, low-cost index funds, fractional share investing, commission-free trades, and access to nearly every investment product most people will ever need.

Robinhood has a solid offering with a few unique perks, such as Roth IRA contribution matches and periodic bonus promotions. They have one of the cleanest, most intuitive mobile apps, which makes investing feel approachable. Fractional share purchases are very smooth on Robinhood, making it easier to invest small amounts of money. They also helped pioneer commission-free trading and popularize fractional shares for everyday investors.

Vanguard is another great choice. Their unique ownership structure helps keep costs low and aligns the company’s incentives with investors’ interests. They are also the firm that created the first index fund, and they remain a leader in low-cost, long-term investing.

Whichever brokerage you choose, the most important thing is to stick to a long-term mindset and resist the urge to trade frequently instead of investing patiently. These four are my top picks, in no particular order—you really can’t go wrong with any of them. I personally use both Robinhood and Fidelity for different types of accounts.

Fund Types

Key Takeaway: ETFs and mutual funds are both great ways to invest in diversified index funds; the differences are mostly about trading, taxes, and portability.

There are two main types of investment funds you’ll encounter: ETFs (exchange-traded funds) and mutual funds. Both are baskets of stocks (or bonds) that give you instant diversification. They’re structured a little differently, but most of those structural details don’t really matter for long-term investors. Here are the differences that do matter.

ETFs trade on a stock exchange, just like individual stocks. You can buy and sell them during market hours (9:30 a.m. – 4:00 p.m. ET), and trades execute in real time. You can place market orders for immediate execution or limit orders to target a specific price. ETF prices update continuously throughout the day.

ETFs are also slightly more tax efficient. You generally won’t owe capital gains taxes from an ETF unless you sell your shares at a profit.

Mutual funds are purchased directly through the investment firm. Orders are executed once per day at the fund’s closing price, and prices are updated only after the market closes—there’s no real-time pricing during the trading day.

Mutual funds are slightly less tax efficient. In some cases, they can distribute capital gains when the fund sells securities, which can create a tax bill for you even if you didn’t sell anything. That said, this is relatively rare for low-cost index mutual funds, which tend to trade infrequently and remain highly tax-efficient overall.

In practice, either ETFs or mutual funds are perfectly fine as long as you’re using low-cost index funds. Mutual funds can be a bit easier to automate with recurring investments, depending on the brokerage. ETFs have the edge on tax efficiency and flexibility.

Another practical difference: ETFs are universal, meaning the same ETF can be bought at almost any brokerage firm. Mutual funds are usually proprietary to the brokerage that offers them, and buying another firm’s mutual fund often comes with extra fees. This also affects portability—ETFs can be transferred from one brokerage to another, while mutual funds typically have to be sold and moved as cash.

I started out using mutual funds, but over time I’ve come to prefer ETFs for their portability, real-time trade execution, and continuous price updates.

Tickers

Key Takeaway: Use these low-cost index funds to build your portfolio: VTI, VXUS, and BND. Reinvest your dividends. Choose the most similar index fund options available in your 401k or HSA if these specific funds aren’t offered.

Ticker symbols are short letter codes that represent a specific stock or fund—basically, an abbreviation. Below are the ticker symbols for low-cost index funds that cover the core of a solid, diversified portfolio. I’ll start with ETFs, since they can be purchased at any brokerage firm, and then list the mutual fund equivalents offered by Fidelity and Vanguard.

ETFs

• VTI – Total U.S. Stock Market Index Fund.
• VXUS – Total International Stock Index Fund.
• BND – Total Bond Market Index Fund.

Mutual Funds (Fidelity)

• FSKAX – Fidelity Total Market Index Fund. VTI Equivalent.
• FTIHX – Fidelity Total International Index Fund. VXUS Equivalent.
• FXNAX – U.S. Bond Index Fund. BND Equivalent.

Mutual Funds (Vanguard)

• VTSAX – Total Stock Market Index Fund. VTI Equivalent.
• VTIAX – Total International Stock Index Fund. VXUS Equivalent.
• VBTLX – Total Bond Market Index Fund. BND Equivalent

Set your dividends to automatically reinvest into your funds. Reinvesting dividends may feel small in the moment, but it significantly boosts your long-term returns through compounding.

In employer plans like a 401(k) or HSA, you may not have access to the exact funds listed above. That’s fine. You will almost certainly have index funds to choose from that are similar. If an S&P 500 index fund is available, that is an excellent substitute for the U.S. stock portion of your portfolio.

Portfolios

Key Takeaway: Adjust your asset allocation based on your stage of life—more growth-focused while working and more income-focused as you near retirement—while maintaining meaningful stock exposure to support long-term wealth across generations.

Asset allocation isn’t an exact science. The goal isn’t perfection—it’s to stack the odds in your favor and avoid catastrophic mistakes. Your working years are primarily for wealth accumulation, while your retirement years are focused more on wealth preservation. I’ve outlined an example ETF portfolio for each stage of life. As you approach retirement, you can gradually transition toward the wealth preservation portfolio, beginning roughly 10 years before you plan to stop working.

Wealth Accumulation Portfolio:

• 70% VTI | 30% VXUS

Wealth Preservation Portfolio:

• 49% VTI | 21% VXUS | 30% BND

Your asset allocation should evolve as you move through different stages of life. That said, you generally don’t want to become too conservative—even in retirement—because you’re not just investing for yourself, but potentially for your children and grandchildren as well. Maintaining a meaningful allocation to stocks allows your portfolio to continue growing over time, even as you prioritize stability.

“A good person leaves an inheritance for their children’s children.”

Proverbs 13:22

Play Money

Key Takeaway: If you want to experiment or take on higher-risk investments, limit it to a small portion of your portfolio (no more than 5%) so your long-term wealth plan remains anchored in diversified, low-cost index funds.

While index funds are effective, it’s true that they can feel a bit boring. If you want to be more hands-on or add some excitement, limit yourself to no more than 5% of your total portfolio (across all accounts) as “play money.” With this small slice, you’re free to invest, speculate, or even gamble however you like.

Keeping this portion small lets you scratch the itch without putting your long-term wealth at risk—and if it goes well, you might even pick up some extra gains. Examples include individual stocks, options, narrowly focused ETFs, or crypto. Just be disciplined about keeping at least 95% of your portfolio invested in diversified, low-cost index funds.

Types of Accounts

Key Takeaway: Prioritize tax-advantaged retirement accounts; capture any employer 401k match and use Roth accounts when available. Use a brokerage for flexible investing after retirement savings are on track. Take full advantage of an HSA as a powerful tax-efficient tool for healthcare and long-term investing.

There are different types of accounts you can use to hold investments, and each comes with its own pros and cons. The four account types I recommend are:

1. Roth IRA
2. 401(k)
3. Taxable brokerage account
4. HSA (Health Savings Account)

Just as money is a tool, these accounts are tools. Using the right tools in the right order can make a big difference in how efficiently you build wealth.

Roth IRAs and 401(k)s are both retirement accounts. A Roth IRA is opened individually, while a 401(k) is provided through your employer. In general, money in these accounts is meant to stay invested until age 59½; withdrawing earlier usually triggers taxes and penalties. While there are legal ways to access retirement funds early, doing so undermines the entire purpose of long-term investing. Likewise, avoid 401(k) loans—they often create more problems than they solve.

With a 401(k), you choose a percentage of your paycheck to contribute, and many employers offer a match up to a certain percentage. For example, if your employer matches up to 5% and you contribute 5%, they’ll add another 5% on your behalf. That match is free money and an instant 100% return; always take full advantage of it.

Some employers offer a Roth 401(k) option. I prefer Roth over traditional (pre-tax) accounts. Traditional accounts give you a tax break today, but you’ll owe taxes when you withdraw the money in retirement. Roth accounts are taxed up front, but qualified withdrawals—including all the growth—are tax-free. Roth accounts also protect you from future tax increases. Another major advantage: Roth accounts do not have required minimum distributions (RMDs). Traditional retirement accounts force you to withdraw (and pay taxes on) a certain amount each year starting at age 73. Roth accounts allow your money to compound for as long as you want.

The minimum 15% of income I previously recommended investing should go into retirement accounts. First, contribute enough to your 401(k) to get the full employer match. Then direct the remainder of your 15% into a Roth IRA. For example, if your employer matches 5%, contribute 5% to your 401(k) and 10% to your Roth IRA. Roth IRAs have annual contribution limits, so if you hit that cap, direct additional savings back into your 401(k) until you reach your target investment rate for the year.

Brokerage accounts are taxable investment accounts. You can access this money at any time without age restrictions, but there are no special tax advantages. Dividends, capital gains distributions, and profits from selling investments are taxable. You should minimize taxes where legally possible, but don’t let the tax tail wag the investing dog—paying taxes means you’re making money. Once you’re investing at least 15% of your income into retirement accounts, additional long-term investing can go into a brokerage account.

HSAs (Health Savings Accounts) are tied to certain high-deductible health insurance plans, but they are also powerful investment vehicles. If available to you, choose the lowest-deductible plan that still qualifies for an HSA. Try to contribute the maximum each year if you can; at a minimum, aim to contribute enough to cover your deductible. Don’t count HSA contributions toward your 15% investing goal—treat them as part of your healthcare planning. Keep enough cash in the HSA to cover your deductible and invest anything beyond that.

HSA money is tax-free when used for qualified medical expenses. If used for non-medical expenses, you’ll pay taxes and a penalty—though after a certain age, the penalty disappears and it functions similarly to a traditional retirement account. In this way, an HSA can serve as both a healthcare safety net and an additional retirement account.

Mortgages

Key Takeaway: Homeownership can build long-term stability and wealth, but whether to buy versus rent or invest versus pay down a mortgage early is a personal choice that should align with your goals, risk tolerance, and peace of mind. Just make sure you are moving your financial life forward rather than standing still.

I generally believe owning a home is better than renting, but this is ultimately a personal decision. Over the course of your working life, you’re going to pay for housing one way or another. With renting, those monthly payments never build ownership—you’re paying for flexibility and convenience, but you don’t end up with an asset. With homeownership, your payments gradually build equity in something you can eventually own outright and potentially pass on to your heirs.

Renting does have real advantages: lower responsibility for maintenance and repairs, greater flexibility to move, and often lower short-term costs. Homeownership, on the other hand, offers stability, independence, and the long-term benefit of eliminating a mortgage payment once the loan is paid off (leaving only taxes, insurance, and upkeep). That long-term freedom can be meaningful. There’s no need to rush into buying a home, though. Renting for a period of time is perfectly reasonable if it fits your stage of life or financial situation.

If you do buy a home, stick with a fixed-rate mortgage. I prefer a 30-year mortgage because it gives you flexibility: your required payment is lower, which frees up cash flow, and you can always make extra principal payments to pay it off early if you choose. A 15-year mortgage will have a lower interest rate, but the higher required payment reduces flexibility.

Whether to pay off your mortgage early or invest that extra money is a classic debate. While you can use math to compare expected returns, the “best” choice depends just as much on your personal goals, temperament, and values. If your primary goal is maximizing long-term wealth, compare your mortgage rate to the long-term expected return of the stock market. Historically, U.S. stocks have returned around 9–10% annually over very long periods, though future returns are never guaranteed. If your mortgage rate is meaningfully lower than that, investing instead of aggressively paying down the mortgage is often the higher-upside choice, but it comes with market risk. Stock returns can underperform for long stretches of time, and that risk grows as your mortgage rate rises. 

One advantage of mortgages is that interest rates are not permanent. You may be able to refinance later if rates fall, which can tilt the math further in favor of investing over time. The rate you lock in at purchase is effectively the worst rate you’ll have; you may get opportunities to improve it later.  

That said, peace of mind matters. If being debt-free is deeply important to you and owning your home outright brings you a sense of security, there is nothing wrong with prioritizing paying off your mortgage early—even if it’s not the mathematically optimal move. Just make sure you’re still investing at least 15% of your income into retirement accounts first. Don’t sacrifice your long-term retirement security to accelerate your mortgage payoff.

One downside of tying up too much of your wealth in your home is that it is illiquid. Home equity isn’t easily accessible without selling or borrowing, which limits flexibility. Investments in stocks are far more liquid and give you more options if circumstances change. While your investments shouldn’t replace your emergency fund, they do provide another layer of financial resilience.

Whether you prioritize investing or paying down your mortgage, the key is to be intentional. Either path—done consistently—is far better than doing neither.

Financial Advisors

Key Takeaway: Be selective with financial advisors. Avoid commission-driven salespeople and be cautious with ongoing percentage-based management fees. Learning enough to manage simple, low-cost investing yourself can save you significant money over time.

Use discernment when working with financial advisors. Some are genuinely focused on helping clients, while others are not. It’s perfectly reasonable to pay an advisor an hourly rate, flat fee, or project-based fee for targeted guidance. People deserve to be compensated for valuable expertise.

Be cautious with advisors who charge an AUM (assets under management) fee—a percentage of your portfolio each year. The fee may sound small (often around 1%), but it creates a permanent drag on your long-term returns. For example, on a $1 million portfolio, a 1% fee is $10,000 per year. Over decades, that compounding cost can significantly reduce your wealth.

With a modest amount of education and a simple, disciplined approach (like the one outlined on this site), most people can manage their own investments and avoid this ongoing fee. That said, if investing feels overwhelming or you’re not confident in managing your finances well, working with an AUM advisor can be a reasonable last resort. Paying for competent guidance is far better than making costly mistakes on your own.

Avoid commission-based advisors. Their compensation depends on selling you specific financial products, which creates an inherent conflict of interest. In most cases, the products they sell are more expensive and no more effective than low-cost index funds. If you work with an advisor, look for one who is fee-only and acts as a fiduciary—someone who is legally obligated to put your interests first.

A quick note: The ideas shared here reflect my personal opinions and how I think about money and investing. They are not individualized financial advice. Everyone’s situation is different, and you should make decisions based on your own circumstances. I am not a licensed financial advisor, and any decisions you make are your own responsibility.

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